Originally Posted by Gibsy:
“Forgive my ignorance here, but am I missing something? How can those figures be classed as impressive when you factor in ALL of BT Broadband customers get the channel free...how many households is that when you factor in Virgin XL customers.”
We don't know precisely but reports suggest approx 5 million households are receiving BT Sport:
- Just under 2m VM XL
- Approx or slightly more than 2m BT broadband for free (out of 7m BT broadband homes)
- Balance of approx 1m paying subs
Originally Posted by Gibsy:
“On a slightly different matter, has it ever been discussed what ROCE BT are receiving by the investments made in BT Sport? Yes they are stemming the loss of broadband customers but has it actually been worth it considering the amount paid out for rights.”
I wouldn't look at it in terms of ROCE because BT Sport isn't a highly capital intensive business - sports rights are a cost charged to the P&L as incurred. Investment in fixed assets is minimal.
It's a common misconception (fuelled by various media articles) that BT was losing broadband customers - it wasn't - it has consistently been growing its number of broadband customers every single quarter for many, many years.
It's hard to assess BT Sport because it all depends upon how the business would have done without it. However we can say that in the first year of BT Sport:
- BT's Consumer business has grown its revenues for the first time for many, many years
- Line losses have been massively reduced
- Market share of broadband net additions has risen substantially
In terms of profitability, BT Consumer EBITDA was down 14% for the year as a whole (y/e 31/03/14) though arguably it might have fallen anyway without BTS. In the final quarter (to 31/03/14), EBITDA was up 5%.
Slides 21 and 22:
http://www.btplc.com/Sharesandperfor...414-slides.pdf
In the first quarter of the current financial year (quarter ending 30/06/14), Consumer EBITDA rose 3% and revenue growth accelerated further.
Slide 16:
http://www.btplc.com/Sharesandperfor...114-slides.pdf
Adding in the factor that there were significant one-off launch costs for BTS in year 1, I think the fact that Consumer EBITDA is turning upwards (albeit only marginally) is evidence to suggest BTS can be considered at least broadly successful so far.
There is also the positive benefit on the Openreach business - this is hard to measure but it certainly has to be a positive to some degree (ie which is on top of what we see in the Consumer Division numbers posted above).